BREAKING -- Via Reuters: “The U.S. ambassador to Libya and three other embassy staff were killed in a rocket attack on Tuesday night that targeted his car in the eastern Libyan city of Benghazi, a Libyan official said on Wednesday.” http://reut.rs/QP7qhL

Story Continued Below

CALDWELL TO ADDRESS HOSPITAL ALLEGATIONS -- In what could be an explosive hearing, Lt. Gen. William Caldwell is set to testify this morning before the House Oversight National Security Subcommittee. In July, the subcommittee brought in one of Caldwell’s former subordinates, who testified that the general had impeded an investigation into a hospital in Afghanistan because he wanted to stave off a potential controversy right before the 2010 congressional elections. Caldwell has been accused of trying to protect President Obama and of bragging to subordinates that he has a close personal relationship with the president.

That month, Danger Room published a story that painted a more complicated picture: Caldwell might have actually invited DOD’s Inspector General to investigate Dawood National Military Hospital, where Afghan soldiers were exposed to horrible conditions, including starvation. A source sympathetic to Caldwell’s case told Danger Room that the general was angry with his subordinates not because he thought the investigation could influence elections back home, but because he was worried it would embarrass the Afghan government and damage key relationships. More here: http://bit.ly/QLx3Qs

The hearing is at 9:45 a.m. in 2154 Rayburn.

HAPPY WEDNESDAY AND WELCOME TO MORNING DEFENSE, where we’re always on the lookout for tips, pitches and feedback. Email us at awright@politico.com and follow us on Twitter @morningdefense and @abwrig.

LEVIN: SEQUESTRATION TALKS UNDERWAY -- The SASC chairman said members of Congress have been discussing ways to avert the automatic budget cuts. “I’m involved in discussions, and there’s others involved in discussions,” Levin told reporters yesterday. And he’s very optimistic about the chances for an agreement between the two parties: “I predict there will not be a sequester,” Levin said. “One way or the other, since 90 percent of us don’t want it, it won’t happen. And my hope is that it won’t happen early enough to avoid any instability.”

For his part, McCain offered a less rosy view, saying yesterday that his plan to delay sequestration by three months was “probably not going to happen, unless the president shows some leadership.” McCain then added: “Why doesn’t he call us up to the White House and say what do we need to do to fix this? That’s what presidents are supposed to do. That’s why his title is commander in chief, not mine. I wish it were.”

McCAIN, GRAHAM DISCUSS ROMNEY’S F-22 PLAN -- The two GOP senators yesterday tiptoed around Romney’s weekend statement that as president he would buy more F-22s -- a plan that could have nearly $1 billion in overhead costs because the production line would have to be reopened. Neither senator would offer full-fledged support for the plan, but both said they were open to the idea. “If you believe Iran is a real threat, we’re going to need planes like the F-22 to be able to deal with future threats where air capabilities, defense capabilities, are growing,” Graham said. “How the F-22 fits into a new budget would be a good discussion to have.”

McCain chimed in: “I’d be more than happy to look at their rationale for why they think we need more F-22s, but the biggest problem right now is sequestration. We’re not going to build more of anything unless we take care of sequestration. In fact, we’re going to build a hell of a lot less.”

TRIVIA TIME -- On this day in 1942, a German U-boat sank which British merchant ship in a maritime incident that led to a policy in which German U-boats would no longer take part in rescue missions? For the answer, read on.

THE HILL TODAY --

-- The Senate begins consideration of the Veterans Jobs Corps Act, a grant program to boost employment among veterans. The measure has little chance of being taken up by the House before the November elections.

-- The House could vote as early as today on a revised version of the Stolen Valor Act, which was ruled unconstitutional in June.

-- There are also a couple of interesting hearings today: HASC has a full-committee meeting at 10 a.m. in 2118 Rayburn to discuss operational contracting support. And the House Energy and Commerce Oversight Subcommittee meets at 10 a.m. in 2123 Rayburn to discuss nukes.

TOP STORY: “U.S. diplomat killed as Islamists burn consulate in Libya; protesters storm embassy in Egypt,” by McClatchy’s Nancy A. Youssef -- “A State Department officer was killed Tuesday when armed Islamist militants overran the U.S. consulate in Libya’s second largest city in a day of rage that also struck the U.S. Embassy in Cairo, where demonstrators hauled down the American flag, tore it to pieces and burned it. … The storming of U.S. diplomatic compounds in Benghazi and Cairo, where no one was injured, took place on the 11th anniversary of the Sept. 11 terrorist attacks but appeared to be sparked by outrage over the release of a movie trailer that conservative Muslims in both countries said denigrated Islam and its holiest figure, Mohammed.” http://bit.ly/QOxKIZ

OBAMA, ROMNEY CAMPS TRADE BARBS OVER EMBASSY PROTESTS -- The Romney campaign last night accused the White House of sympathizing with the protesters in Cairo, with Romney saying that “it’s disgraceful that the Obama administration’s first response was not to condemn attacks on our diplomatic missions, but to sympathize with those who waged the attacks.” The statement appears to have been aimed at the U.S. embassy in Cairo, which said in response to the protests that it condemns “efforts to offend believers of all religions.” The Obama administration has disavowed the embassy’s statement, with Hillary Clinton insisting in a statement of her own, “There is never any justification for violent acts of this kind.” POLITICO’s Byron Tau has the story: http://politi.co/Opnko7

ROMNEY SETS 2014 AS GOAL FOR AFGHANISTAN -- The Republican presidential nominee once again set 2014 as his goal for getting out of Afghanistan. Basically, it’s the president’s plan but with a subtle difference: While Obama talks about 2014 as if it’s set in stone, Romney views the date as a moving target, one that could be pushed back if necessary. “Our goal should be to complete a successful transition to Afghan security forces by the end of 2014,” Romney said at the National Guard convention. “We should evaluate conditions on the ground and solicit the best advice of our military commanders.” POLITICO’s Josh Gerstein and Ginger Gibson have more: http://politi.co/SC0GuA

WHO’S WHERE WHEN --

11:45 a.m.: Jessica Wright, ASD for reserve affairs, speaks at the National Guard Association’s General Conference, in Reno, Nev.

GOP WELCOMES NEW MISSILE DEFENSE REPORT -- In a report released yesterday, the National Research Council called for an overhaul of today’s missile defense systems, saying the current systems are inadequate to protect the United States from potential long-range strikes. The report lends support to the idea, championed by House Republicans, of adding a third strategic missile interceptor site on the East Coast. The report also acknowledged that today’s systems can be thwarted by decoys and other countermeasures -- a point seized upon by the Union of Concerned Scientists, which is advocating more extensive testing of the Ground-Based Midcourse Defense program. Here’s the report: http://bit.ly/Qcn3np

REP. TIERNEY WOULD SQUEEZE EX-BLACKWATER -- Massachusetts Democrat John Tierney is pressuring the State and Defense departments to consider suspending or debarring Academi, the private security firm formerly known as Blackwater. Tierney is asking the agencies to reevaluate last month’s $7.5 million settlement by the North Carolina company over alleged weapons export violations, saying the fine isn’t severe enough and expressing concern over Academi’s continued eligibility for government contracts. “This has been a repeated problem that’s gone on -- this isn’t a one-off situation, and it’s not just Blackwater,” Tierney told POLITICO.

An Academi spokesman responds: “While Academi has been charged to resolve those inherited issues, we have nothing in common, culturally or operationally, with that legacy company,” the spokesman said. “Today, Academi is working to become the industry leader in governance, compliance and regulatory matters. It is fair to say -- and important to note -- that the company that was once known as Blackwater simply does not exist anymore in the company that is now Academi.” Leigh has the full story: http://politi.co/RKOOzm

DESSERT: RUSSIAN SHIPS ON DISPLAY AT DNC -- Via Sam Fellman of Navy Times: “On the last night of the Democratic National Convention, a retired Navy four-star took the stage to pay tribute to veterans. Behind him, on a giant screen, the image of four hulking warships reinforced his patriotic message. But there was a big mistake in the stirring backdrop: those are Russian warships.” http://bit.ly/SaCRnd

TRIVIA ANSWER -- A German U-boat attacked the British Lanconia on this day in 1942, killing 1,400 men. After realizing there were Italian POWs on board, German U-boats attempted to rescue the survivors but were bombed by an American plane. The Germans then ordered all U-Boats to cease attempts to rescue crews of sinking ships. The History channel’s website has more: http://bit.ly/TINTFO

CORRECTION: An earlier version of Morning Defense mistakenly listed a speech by Rep. Adam Smith on today's calendar of events. Smith is speaking tomorrow at the Georgetown University Law Center at 11:30 a.m.

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Authors:

About The Author

Austin Wright is a senior defense reporter based at the Pentagon covering budget, policy and national security issues. He has been with POLITICO since 2011 and was previously a web producer and author of the widely read newsletter Morning Defense.

Before POLITICO, Wright worked for National Defense magazine, interned at The Chronicle of Higher Education and taught sixth-grade English at Kramer Middle School in Washington.

Wright hails from Richmond, Va., and graduated in 2009 from the College of William and Mary, where he was editor of the student newspaper, The Flat Hat. He lives in Northern Virginia with his wife, Leanne, and their dog, Kernel.